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Jan 30, 2023

CPWA Q1 2023 Portfolio Changes

CPWA Newsletter Main

From the Portfolio Management Team 
Q1 2023 Portfolio Changes
We recently made multiple shifts in our internally-managed model portfolios and are currently trading accounts to incorporate the changes. You will notice trading activity in your accounts that we manage to our models. Highlights of changes made and the rationale behind the moves are noted below, and—as always—please call us for a more detailed discussion. 

Quick Thoughts & Observations:

  • The Federal Reserve raised interest rates rapidly in 2022 to fight the worst inflation seen in the US in 40 years. It appears that the Fed will slow down the pace of rate increases and potentially take a pause after one or two smaller (25 basis point) increases.
  • Both stocks and bonds experienced a sharp decline in 2022 but have started the year with a nice rebound.
  • The financial markets are signaling a belief that the Fed will cut rates toward the end of the year, although the Fed continues to state that they will not cut rates that quickly.
  • The end of China's "Zero COVID" policy could lead to a rebound in economic activity and a resurgence in inflation.
  • A potential recession could happen in 2023 as indicated by inverted yield curves and declines in the Leading Economic Indicators.
  • We believe that if a recession occurs in 2023, it is likely that it will be short-lived and relatively mild, and the markets will continue to look past the immediate term and for good news in 2024.

Against this backdrop, we are extending duration in our fixed income portfolios to take advantage of the currently elevated rates, and we are adding exposure in mid-quality corporate and high-quality mortgage bonds, where we see the best opportunities. We are balancing equity portfolios between value, blend, and growth stocks and ensuring each model has the right mix of large, mid, small, and international companies. We continue to pay close attention to the individual stocks and funds (mutual funds and ETFs) we own, adjusting allocations per our analysis and ongoing research.

Please contact our office or your main advisor(s) with any questions or to discuss further.

-Team Cerro Pacific


Cerro Pacific Wealth Advisors LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Cerro Pacific Wealth Advisors LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Cerro Pacific Wealth Advisors LLC unless a client service agreement is in place.